Yuga Labs Wins Legal Battle Against Ripps, Cahen Over NFT Collection
The U.S. District Court for the Northern District of California has ruled in favor of Yuga Labs in the form of a partial summary judgment in its action against Ryder Ripps and Jeremy Cahen, whom Yuga Labs accused of trademark infringement over a parody of BAYC’s non-fungible token (NFT) collection.
The U.S. District Judge John Walter in a summary judgment ruled that, Yuga was entitled to protect the BAYC trademark and that Ripps and Cahen’s project, known as RR/BAYC, is not artistic expression protected by the First Amendment.
Yuga Labs, is an organization behind the well-known Bored Ape Yacht Club (BAYC) NFT collection.
In May 2022, Ripps and Cahen designed the RR/BAYC collection, consisting of NFTs that closely resembled Bored Apes. However, Ripps claimed that these NFTs promoted Nazi symbolism.
Meanwhile, in June, Yuga Labs filed a lawsuit against Ripps and his associate, accusing them of developing and promoting “copycat NFTs” that devalued the genuine ones. Yuga claimed that Ripps marketed and sold the collection using the same trademarks as BAYC’s actual creator to confuse consumers and damage Yuga’s reputation. The lawsuit alleged that this was a deliberate attempt to cause confusion and make buyers question whether the RR/BAYC NFTs were legitimately affiliated with the authentic BAYC.
Ripps had tried to block the lawsuit by claiming that his NFTs were a form of appropriation art and were meant as artistic criticism. He also made allegations that Yuga’s BAYC logo and artwork contained Nazi symbolism and racist messaging. In December, Ripps and Cahen claimed that NFTs were unique and could not be replicated.
The Court on perusal of facts and records found that, Yuga Labs owns the BAYC trademarks, and opined that they are valid and enforceable trademarks.
Additionally, the Court determined that because Yuga’s BAYC marks were well-known in the industry and the RR/BAYC project was meant to mislead, the defendants’ use of the BAYC marks did not qualify as either fair use or an artistic expression under something known as the ‘Rogers Test.’
The judge concluded that the defendant’s actions were motivated by a malicious intent to profit and that the two are engaging in cybersquatting. The Court also found that the domain names rrbayc.com and apemarket.com that the defendants registered and carried the potential to cause confusion.
Further, the judge was of the considered view that, “Defendants’ sale of RR/BAYC NFTs is no more artistic than the sale of a counterfeit handbag.”
Yuga Labs asserted that it should be compensated for the cybersquatting with $200,000 in statutory damages.
The Court, however, denied this claim and stated that the calculation of damages would occur during a pending trial.